THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Thursday, April 10, 2014

Initial Claims – Good News…Correction?

INITIAL CLAIMS FALL (Reuters)“Initial claims for state unemployment benefits dropped
32,000 to a seasonally adjusted 300,000 for the week ended April 5, the Labor
Department said. That was the lowest level since May 2007, before the start of
the 2007-09 recession… "The return of warmer temperatures has brought with
it better data. There are a number of signs that progress in the jobs market
could be accelerating, a positive sign for the broad economy as well,"
said Jim Baird, chief investment officer at Plante Moran Financial Advisors in
Kalamazoo, Michigan.”Full story at…http://www.reuters.com/article/2014/04/10/us-usa-economy-idUSBREA390UQ20140410?feedType=RSS&feedName=businessNews

MARKET REPORT

Thursday, the S&P 500 was down about 2.1% to 1833 (rounded).

VIX was UP about 15% to 15.89.The yield on the 10-year Treasury Note moved up slightly
to 2.69%.Although Wednesday’s strong price-volume action indicated
Thursday would be a down day (as I noted Wednesday), I can’t say I expected
this much down.Thursday was another statistically
significant day since it exceeded my price and volume statistical parameters,
but it was in the down direction.This
would usually (about 62% of the time) be followed by an up day on Friday.

There are other hints too.“Trin” is short for Trader’s-Index.It is simply an equation relating advancing
and declining stocks with advancing and declining volume.Today’s high Trin of 2.4; positive Market
Internals; strong advance decline ratio; and a high negative Tick of -743 suggest
a possible short term bottom, with the emphasis on “possible.”(“Tick” measures positive versus negative last
trades at the close.)

Not all signs agree: The size of Thursday’s down move
triggered what I refer to as a panic indicator and that can mean that there is more
downside to come, either now or in the near term. The Index closed near the low,
but there was a little attempt to rally late, so it would seem the Pros are
unsure or decided not to play.The Index
hasn’t even gotten to the lower trend line, now roughly around 1800-1790.The RSI (Relative Strength Index) is not in
oversold territory.The increased
choppiness does support the argument that there is a bigger correction coming.

I wrote Wednesday: “All in all…it appears the correction
has been postponed.”Hmmm.That could still be true, but I am less
certain today. In a correction, the low of 1742 on 3 Feb will be
tested.Then we may have a better idea
of how serious any correction may be (if there is one).

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing on the NYSE
declined to 54% at the close.(A number above
50% for the 10-day average is generally good news for the market.) New-highs
outpaced new-lows Thursday.The spread
(new-highs minus new-lows was +31.(It
was +70 Wednesday). The 10-day moving average of change in the spread was +1. In other words, over the last 10-days, on
average, the spread has INCREASED by 1 each day. The smoothed 10-dMA of
up-volume remained up Thursday too.The
internals remained positive on the market.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme low-volatility,
straight-up year like 2013.

NTSM

The NTSM analytical model remained HOLD Thursday.Sentiment was up slightly to a screaming high
85%-bulls my highest reading ever (5-dMA of {bulls/(bulls+bears)} for funds
invested in selected Rydex/Guggenheim funds. The VIX, Price & Volume indicators
are all neutral.

MY INVESTED POSITION

I increased my stock allocation to 50% invested in stocks
on 26 March because of the NTSM indicators turned positive Monday (24 Mar) at
the close.Further the 5-10-20 Timer
was positive along with market internals on 26 March as they are today, 28
March.50% is fully invested for me at
this time.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.